Three Investment Mistakes during early life !!

• CA Sumit Motwani
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Three Investment mistakes I made while I started earning. I Want to share my experience with all freshly qualifieds who have started saving and investing.

1. F&O Trading Losses – I remember the day when “Yes Bank” opened at a discounted price of 40% and I was holding lot  of futures based on some random infomration. At that point my overall equity portfolio was wiped off due to this single loss.

Strategy number one – “Always follow 10% rule”. Never hold a single stock more than 10% of overall portfolio.

Strategy number two – Always use stop loss on all your positions.

Strategy number three – Never be too much optimistic for any of your positions. Act smartly.

2. Not Diversifying asset – Initially I never invested in Gold and Silver understanding that metals are old school asset and Equity and Derivatives are new edge assets to be invested. Gold has given almost 60-70 percent returns in last four years. Never read about new products such as Lending products, Digital Assets, etc.

Strategy number one – Always keep your exposure in all sort of assets, i.e Metals, Mutual Funds, Equities, REITS, Digital Assets, P2P Lending products, Fixed Income Products.

Strategy number two – Diversify your asset such that it fulfils your utility too. Example – Investment in Gold can be used during time of your marriage. P2P lending products may cater your liquidity income. Investment in Real estate may be useful to build your home or office in some years. Fixed Deposit may help you during tough times.

3. Investment in Private Business – I invested in a my relatives private business of a chain restaurant and got stake of around 2 percent based on assumption that restaurant businesses are very profitable which was never so.

Strategy number one – Never investment into small private businesses until you understand them well and do your own due diligence.

Strategy number two – Never invest with so minute stake where you do not get much decision making or information seeking powers.

Savings + Investments would make you wealthy.

Happy Reading!!